The Case of the Disappearing $300,000 Loan

For homebuyers, nothing beats the excitement and relief that comes with a home loan approval. So you can imagine the horror when those funds suddenly disappear.

John and Nancy Ritter* experienced the trauma of this situation firsthand when a thief used stolen personal information to initiate a fraudulent wire transfer of $300,000 from the couple’s credit union to a bank account in Florida.

Wire transfer fraud is a growing problem because it is an easy way for identity thieves to steal money from banks and credit unions. In 2015, wire transfer losses among consumers who filed complaints with the Federal Trade Commission totaled more than $283 million. And the number of consumer complaints that involved wire transfers as the method of payment reached a high of 61 percent in 2015, up from 29 percent the previous year, according to the FTC’s Consumer Sentinel Data Book.

High-value customers are particularly vulnerable. Wealthy individuals are one-and-a-half times more likely to fall victim to identity theft, according to Javelin Strategy & Research.

Wire or electronic transfer fraud is particularly sinister because it can be hard to prove and recover funds, even with the correct response. And when perpetrators are armed with key personal information, they can be quick and effective. Often, thieves go out of their way to ensure seamless transfers. For example, thieves are can hijack a victim’s telephone number by calling the victim’s phone company to have calls forwarded to them before initiating the transfer.

“The criminals have gotten smarter,” said Victor Searcy, director of fraud operations at CyberScout. “They have figured out how to access customers’ Internet and telephone accounts. When financial institutions contact the customer to validate the transaction, it’s the criminal who responds.”

In the Ritters’ case, the thief called the couple’s credit union directly to set up two separate transfers of $160,000 and $140,000 each. The thief relied on stolen information to answer security questions and win the confidence of the credit union employee overseeing the transaction.

When John Ritter noticed the missing funds, he immediately called the credit union to freeze his account and dispute the transfers. Fortunately, John also had access to CyberScout Identity Management Services through his insurance carrier. His agent connected him with an CyberScout fraud specialist who took immediate steps to help John protect his family’s identity and credit by placing a fraud alert on the couple’s accounts with a credit bureau.

CyberScout fraud specialists also can help victims:

• Notify financial institutions immediately to block the accounts impacted by fraud and secure other accounts.

• Review a bank’s account holder’s agreement, internal policy and procedures and the regulatory guidelines governing the fraudulent transaction to determine if the institution is in compliance. If the institution isn’t in compliance, they prepare to file complaints with the attorney general, FBI and the Secret Service.

• Send complaint letters if a bank has refused to maintain contact with the victim and is out of compliance.

With CyberScout’s help, the Ritters moved swiftly to help them recover the lost funds and protect their credit from further fraud. They also learned best practices for guarding personal information.

* Identifying details have been changed to protect the victim’s privacy.